nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒12‒11
six papers chosen by
Maximo Rossi
Universidad de la República

  1. The Marriage Market, Labor Supply and Education Choice By Pierre-André Chiappori; Monica Costa Dias; Costas Meghir
  2. The Spillover Effects of Affirmative Action on Competitiveness and Unethical Behavior By Banerjee, Ritwik; Datta Gupta, Nabanita; Villeval, Marie Claire
  3. On the Interpretation of Non-Cognitive Skills: What Is Being Measured and Why It Matters By Humphries, John Eric; Kosse, Fabian
  4. My Baby Takes the Morning Train: Gender Identity, Fairness, and Relative Labor Supply Within Households By Lepinteur, Anthony; Flèche, Sarah; Powdthavee, Nattavudh
  5. Partner Choice, Investment in Children, and the Marital College Premium By Pierre-André Chiappori; Bernard Salanié; Yoram Weiss
  6. The Dynamic Effects of Health on the Employment of Older Workers By Richard Blundell; Jack Britton; Monica Costa Dias; Eric French

  1. By: Pierre-André Chiappori (Columbia University); Monica Costa Dias (Institute for Fiscal Studies); Costas Meghir (Yale University)
    Abstract: We develop an equilibrium lifecycle model of education, marriage, labor supply and consumption in a transferable utility context. Individuals start by choosing their investments in education anticipating returns in the marriage market and the labor market. They then match based on the economic value of marriage and on preferences. Equilibrium in the marriage market determines intrahousehold allocation of resources. Following marriage households (married or single) save, supply labor and consume private and public commodities under uncertainty. Marriage thus has the dual role of providing public goods and offering risk sharing. The model is estimated using the British HPS.
    Keywords: equilibrium, marriage market, matching, intrahousehold resource allocation, risk sharing
    JEL: D58 I00 C78 D13 D81
    Date: 2016–11
  2. By: Banerjee, Ritwik (Indian Institute of Management); Datta Gupta, Nabanita (Aarhus University); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We conduct an artefactual field experiment to examine various spillover effects of Affirmative Action policies in the context of castes in India. We test a) if individuals who compete in the presence of Affirmative Action policies remain competitive in the same proportion after the policy has been removed, and b) whether having been exposed to the policy generates unethical behavior and spite against subjects from the category who has benefited from the policy. We find that these policies increase substantially the confidence of the lower caste members and motivate them to choose significantly more frequently a tournament payment scheme. However, we find no spillover effect on confidence and competitiveness once Affirmative Action is withdrawn: any lower caste's gain in competitiveness due to the policy is then entirely wiped out. Furthermore, the strong existing bias of the dominant caste against the lower caste is not significantly aggravated by Affirmative Action.
    Keywords: affirmative action, castes, competitiveness, unethical behavior, field experiment
    JEL: C70 C91 J16 J24 J31 M52
    Date: 2016–11
  3. By: Humphries, John Eric (University of Chicago); Kosse, Fabian (University of Bonn)
    Abstract: Across academic sub-fields such as labor, education, and behavioral economics, the measurement and interpretation of non-cognitive skills varies widely. As a result, it is difficult to compare results on the importance of non-cognitive skills across literatures. Drawing from these literatures, this paper systematically relates various prototypical non-cognitive measures within one data set. Specifically, we estimate and compare several different strategies for measuring non-cognitive skills. For each, we compare their relative effectiveness at predicting educational success and decompose what is being measured into underlying personality traits and economic preferences. We demonstrate that the construction of the non-cognitive factor greatly influences what is actually measured and what conclusions are reached about the role of non-cognitive skills in life outcomes such as educational attainment. Furthermore, we demonstrate that, while sometimes difficult to interpret, factors extracted from self-reported behaviors can have predictive power similar to well established taxonomies, such as the Big Five.
    Keywords: non-cognitive skills, personality, preferences, educational success
    JEL: J24 I20 D03 D90
    Date: 2016–11
  4. By: Lepinteur, Anthony (Paris School of Economics); Flèche, Sarah (CEP, London School of Economics); Powdthavee, Nattavudh (University of Warwick)
    Abstract: The current study argues that women's decision to leave the labor force at the point where their income exceeds their husbands' income may have less to do with gender identity norm (Bertrand et al., 2015) and more to do with what women think is a fair distribution of relative working hours within the household. Using three nationally-representative data, we show that life satisfaction is significantly lower among women whose work hours exceed their partners, holding the share of wife's income constant. Men, by contrast, are not affected by working longer or fewer hours than their wives.
    Keywords: fairness, gender identity, life satisfaction, relative income, working hours, labor supply
    JEL: I31 J12 J22
    Date: 2016–11
  5. By: Pierre-André Chiappori (Columbia University); Bernard Salanié (Columbia University); Yoram Weiss (Tel Aviv University)
    Abstract: We construct a model of household decision-making in which agents consume a private and a public good, interpreted as children's welfare. Children's utility depends on their human capital, which is produced from parental time and human capital. We first show that as returns to human capital increase, couples at the top of the income distribution should spend more time on children. This in turn should reinforce assortative matching, in a sense we precisely define. We then embed the model into a Transferable Utility matching framework with random preferences a la Choo and Siow (2006) which we estimate on US marriage data for individuals born between 1943 and 1972. We find that the preference for assortative matching by education has significantly increased for the white population, particularly for highly educated individuals; but not for blacks. Moreover, in line with theoretical predictions, we find that the "marital college-plus premium" has increased for women but not for men.
    Keywords: human capital, college premium, assortative matching, transferable utility
    JEL: D13 J24 C78 I00
    Date: 2016–11
  6. By: Richard Blundell (Institute for Fiscal Studies); Jack Britton (Institute for Fiscal Studies); Monica Costa Dias (Institute for Fiscal Studies); Eric French (Institute for Fiscal Studies)
    Abstract: Using data from the Health and Retirement Study (HRS) and the English Longitudinal Study of Ageing (ELSA), we estimate a dynamic model of health and employment. We estimate how transitory and persistent health shocks affect employment over time. In a first step we formulate and estimate a dynamic model of health. The procedure accounts for measurement error and the possibility that people might justify their employment status by reporting bad health. We find that health is well represented by the sum of a transitory white noise process and a persistent AR(1) process. Next, we use the method of simulated moments to estimate the employment response to these shocks. We find that persistent shocks have much bigger effects on employment than transitory shocks, and that these persistent shocks are long lived. For this reason employment is strongly correlated with lagged health, a fact that the usual cross sectional estimates do not account for. We also show that accounting for the dynamics of health and employment leads to larger estimates of the effect of health on employment than what simple OLS estimates of health on employment would imply. We argue that the dynamic effect of health on employment could be generated by a model with human capital accumulation, where negative health shocks slowly reduce the human capital stock, and thus gradually causes people to exit the labor market.
    Date: 2016–09

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